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工资刚性的经济学思考?

December 22, 2008 Leave a comment

From internet.

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资本主义市场经济都应该遵循这样的经济规律:商品供过于求就要降价。但工资在美国市场就是个例外。它很少受到经济萧条的影响。经济不好,老板可能少涨或不涨工资,也可能干脆解雇部分员工,但却很少给现有员工降薪。

按理说,公司盈利减少工资就该下降。为什么工资偏偏不遵守供求关系的经济规律呢?减薪对公司来说同样可以节约成本,为什么美国公司可以一批又一批 地解雇员工,却不愿意采用给现有雇员减薪的办法来避免裁员呢?减薪可以避免或基本避免裁员。大家都实行弹性工资岂不是两全其美?

这个问题看似简单,其实它是经济学家们多年来面对的一个著名难题。

美国经济学家从来不喜欢用简单易懂地方式讨论问题。他们喜欢以“更为科学的方式”钻研问题,比如运用复杂的数学模型和抽象的理论思辨。经济学家们为此设计了各种各样的经济模型来解释降薪在美国经济环境的不可行性。

在劳动力市场中,工资应像所有其他商品一样,由劳动力供求关系决定,劳动力需求量大,工资就高,反之工资就低。但实际情况是,工资对外部经济环境的变化反映滞后,常常不能灵敏地反映劳动供求关系的变化并作出及时调整。

经济学家把这个现象称为“工资刚性原理”。他们认为,工资本来也是可以上下浮动的,但是企业认为,如果工资降得太低,员工会选择离职—-因为他们认为不工作比低薪工作更好。

所以减薪有害,它会让公司想留住的有价值员工另谋高就。另外的经济学家们解释说,公司内部一些年老资深员工不愿意降薪,他们向管理层施压要求解雇“新招来的”员工。

事实上,美国公司近年来的裁员几乎首先裁掉那些资深员工。资深员工高昂的薪酬成为公司扭亏转盈的负担,而不是那些工资相对较低的新员工。

还有人认为,美国工会、劳资合同与政府最低工资等法规,限制了工资的波动。其他的模型还有“逃避模型”,“相对工资模型”和“隐含合同模型”等。这些所谓的经济模型几乎不辨自破。

耶鲁大学经济学教授杜鲁门・彪利对工资刚性提出来最令人信服和最具创意的解释。

彪利是美国最杰出的数理经济学家之一。他曾任《数量经济学学刊》编辑多年,在具有无穷性质的一般均衡理论、宏观经济学的微观基础方面作出了重大 贡献。他研究了无数种商品经济中均衡的存在性、具有无穷性质经济的核与均衡的等价性、劳动力市场、最优货币数量重大理论问题。

把工资刚性问题交给彪利这样的数量经济学家来解释,会不会让门外汉们如坠烟云?彪利自己也说,他曾经在书斋中“浪费数年时间”引经据典,试图解释经济萧条时期公司为什么宁愿裁员也不减薪。在故纸堆中一无所获后,他决定直接去问公司和企业决策者。除了教学和科研,他把业余时间都用采访公司老板们。这个采访历时八年,访谈了336名企业管理者。最后结集成书,书名就是《经济衰退为何工资不降?》。

书中的最后结论让人大开眼界:“除了一个例外,我的发现不支持任何现有的经济学解释。这个例外就是减薪会极大地损害员工的士气,打击他们的工作积极性。

经济不好就减薪,还会让员工产生管理层趁火打劫的嫌疑。尽管解雇也会打击积极性,但它的影响与减薪相比没有那么严重和漫长。

受访的管理人员认为,减薪会把员工搅得心烦意乱无心工作。一位经理在采访中说,“遭到解雇的员工可能心情更加不好。他们已经出了公司的大门,心情再糟也不是我该操心的事。我更关心留在公司内的员工心情如何。”

经济问题,往往不是一条是非曲直都很分明的“数学”题。

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Heck… why some people want to make a simple matter so complicated? My experience supports this.  I left my prior employer mainly because I got salary cut, and I think I should be able to get better or at least original salary on the market.  And I was right – 15% increase.

Categories: Finance

Real estate investment compared to stock

October 31, 2008 Leave a comment

I just went ahead to research the house price history and found that it’s pretty good. From 1975 to 2000 (before the house bubble), California index went from 16 to 100, which is 625% overall gain, in 25 years. These 2 pages have interesting charts:

http://mysite.verizon.net/vodkajim/housingbubble/
http://investmenttools.com/median_and_average_sales_prices_of_houses_sold_in_the_us.htm

At the same time range (1975 to 2000):

S&P 500 went from 86 to 1420 (1650%)
DJ index: 800 to 10635 (1328%)
401K at 10%: 100 to 1092 (1092%) (before tax) – refer to my tool page: http://onlinedisk.us/mf.asp

First, that shows again that index fund is not bad at all. I’m not confident that I can select a mutual fund that does 10%+ every year for 25 years.

Secondly, real estate investment is good since your cost is only 25% down payment. Let’s do a math:

You put $100 down to buy a $400 house with no on-going cost, and same amount in stock. 25 years later:

– the house is $400*6.25 = $2500
– S&P500 is $100*16.50  $1650
– DJ is $100*13.28 = $1328
– 401K is $1092

Categories: Finance Tags: , , ,

Investment property to primary residence (and 1031 Exchange)

August 1, 2008 Leave a comment

The real estate market is on sale right now. You may already own investment properties and you are buying more. At one point you will sell them.

The profit you make on investment property is tax-able. However, you originally purchased it as an investment property (with proof of your intention), then, due to unexpected reasons you have to use it as your primary residence. Then you live there for 2 years and the profit will be tax free.

What if the investment properties are in the states that you do not plan to relocate to? IRS section 1031 (aka 1031 Exchange) allows you to use the proceed from investment properties to buy other investment properties without having to pay the tax on profit.  So, sell them and buy a big house in a dream location of your own. Use it for investment/rental first (people suggesting a year) then move in with good reasons. Stay 2 years and you can claim the profit.

That said, real estate seems a real good investment tool. Low risk, with possible continuous stream of income, and the earnings are tax-free if plan well.

Categories: Finance

Get Your Free Credit Report

February 27, 2008 2 comments

The law requires the major nationwide consumer reporting companies (Equifax, Experian and TransUnion) to give you a free copy of your credit report each year if you ask for it. Well yes, you need to ask for it.

Go to http://www.annualcreditreport.com or call 877-322-8228 to get it. It’s a service created by these 3 companies.

Categories: Finance

Living Trust – my conclusion

December 26, 2007 Leave a comment

The main purpose of the living trust is to avoid probate – a process that the court decides what to do with your properties. Your heirs/relatives will eventually still get everything but at 3%-10% cost and may take up to 2 years.

If the house and bank accounts are under both of the spouses name, then the spouse automatically gets it without going through probate. So from this perspective, living trust is mainly for your children to get your assets quick and with minimum cost.

Bank accounts, IRA accounts, life insurance etc… as long as they have designated beneficiaries, they will go directly to the beneficiaries. Make sure you specify contingent beneficiaries, which should be all your children, in the event that your spouse also die. You need to ask your bank about adding beneficiaries to your saving accounts. They do not do that for checking account – Citibank told me the first person showing them the death certificate will get all the money in checking account after 60 days. They do saving and CD accounts.

A “will” will not avoid probate. And, title and designated beneficiaries take precedence over the will. Without the will, the court will decide who gets what. With the will, you decide, court executes.

A “living will” is mainly for medical purpose so that someone else can make decision for you (i.e. “pull the plug” so you can die naturally) – you may be interested at this. (In California, “advance health care directive / durable power of attorney for health care ” is used for this purpose.)

“Durable power of attorney for property”- someone to make financial decisions when you are not able to. Court most likely will specify your spouse if you don’t specify one. Not a matter if everything is co-owned.

A living trust will NOT protect you from the creditors, as long as it’s revocable (most are).

My conclusion:

For young couples who jointly own everything and don’t have much properties, and do not worry about estate tax ($2 m threshold for 2008 and will change later) , they do not need estate planing/living trust. Because if one of you dies, your spouse gets everything; if both of you die, your children will get the most liquidate part of your asset directly (maybe through a custodian account if under 18), and they will get your real estate soon or later. You should designate a guardian for your children through a will.

Some links:

Will report the software or other good ways to get a will/living will done shortly.

Categories: Finance

Zero $0 commission on stock trading

December 19, 2007 Leave a comment

Update on 6/1: Now you have to have over $25,000 balance to have the 10 free trade every month. Otherwise it’s $4.5.


Oops, forgot the small print – restrictions applied.

Zecco.com offers 10 free trade every month as long as your balance (cash and stock market value) is over $2500. After 10 free trades or lower balance, you pay $4.5. Well, that’s still cheaper than most of the online brokers. I have opened an account, and placed 2 free trades already. So far so good. I don’t see any catch here. For small investors who place less than a dozen trades every month, this is just perfect!! If you sign up using this link:

http://friends.zecco.com/r/8c4fd326ffaf102a8555

I will get $50 credit. Hey, I will split it with you. 😉

They say they can offer free trade because they do not provide other services other than online trading. I don’t know what services Fidelity could give me when they charge me $19 a trade. I do all the research myself and just need basic trading. $2500 balance? That’s the minimum to have any excitement in stock market, isn’t it?

They also say online brokerage earn most of the income from margin account interest so they can use free trade to attract account signups. That’s perfect for me since I don’t use margin. In a sense, the 10 free trade is also a kind of “reminder” that restrain me from excess trading.

Zecco doesn’t have extended hour trading. The web interface is not the best one I have seen. But, for free trades, it’s acceptable.

For those trade more, you can consider http://www.just2trade.com. They charge straight $2.5 a trade no matter what your balance is and no limit of trades. I don’t have an account but from my research I haven’t seen anyone saying bad on them yet. But anyhow, I’ll no longer trade with Fidelity.

Categories: Finance Tags:

Equity Indexed Universal Life (EIUL) – really a good investment tool?

December 13, 2007 Leave a comment

Every week, there are some free seminars in some fancy hotels – with enticing descriptions of the financial tips/secret they will teach you. I attended one last year.

Essentially they were trying to sell you EIUL – Equity Indexed Universal Life. Now I am a licensed Life Agent in California and have studied this type of product from 4 different insurance companies including New York Life and AIG. My final decision is still not to buy (but it may work for someone else).

There are some books promoting EIUL as a great investment tool. A very famous one is Missed Fortune 101  (Amazon link). There are 2 major benefits:

  • Linked to equity indexed fund so long term performance is very good (usually S&P 500)  – better than 80% of the mutual fund while the expense is very low.
  • You can borrow money from the balance and don’t have to pay back as long as there is still money left to pay insurance premium. This give you tax-free access to you money. Then when you die, you still have death benefit and the loan amount will be deducted from it.

Of course there are many other nice things to say about it. Such as you can enjoy it while you are alive (compare to only your beneficiaries get the money in regular life insurance) and the tax-free growth and withdraw/loan (compare to regular investment tools).

I’ve been thinking about changing career so I decided to give it a try. Getting a Life Agent license isn’t that hard. But I can’t really take a close look at it until I got access to the software that generates the EIUL reports. To compare it with regular investment and IRA-type investment, I made a online calculator (link here but may not work anymore). I have run different numbers to simulate various scenarios.

My final conclusion is that EIUL wins but only at a small margin. But the risk is:

  • Your contribution is locked. The commitment level is very high.
  • The cost to maintain it becomes higher and higher when you go older.

For me, there are still many tax-free/deferred investment options I haven’t taken advantage of yet, such as 529, Roth IRA etc. I should fill them up first before look at this. They are also after tax money and absolutely tax free growth. Then, I can put the rest of the money in an equity indexed mutual fund, it has the same tax-deferred growth benefit but without the high insurance cost (especially when I’m old).

EIUL might be a good estate planning tool but as far as I can see now, I don’t have this problem. 🙂

Since I didn’t buy it myself, I feel hard to sell it to others. Commission on term life is so little that you can only make a living on big volume.  Since I need to pay a few hundred dollars for E&O insurance to keep myself appointed with any insurance company, doing it part-time isn’t practical either. So this career change attempt was over.

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